What is a Closing Disclosure? | Columnists
KNIEPER REAL ESTATE
Pam Knieper, Broker/Owner of Knieper Real Estate, is and has been the premier producer for over 15 years in Hood County and running. She is known as the waterfront expert and real estate authority.
Not to be confused with Seller’s Disclosure which details the physical information about a property, the Closing Disclosure is the document that lists all the costs associated with a real estate transaction. Used when obtaining a mortgage, the Closing Disclosure is required by the Consumer Financial Protection Bureau. It was designed to be a less confusing document than those used before 2015, and its use is mandatory for all mortgages.
However, it should be noted that all real estate transactions in America are required by law to have some sort of settlement disclosure document, including refinances, cash transactions, reverse mortgages, commercial property sales and/or investment. For cash sales, you’ve probably heard of a HUD statement and/or a settlement statement, and while the formats are different, all of these documents serve the same purpose. Ensure that all parties to the transaction know and agree on dollars and cents.
Some of the things you can expect to see on a settlement statement or closing disclosure include:
- The sale price
- Loan amount, interest rate and terms
- Pro-Rata shares for property taxes and assessments
- Company title/escrow fees.
- Credit for buyer prepaid fees for items such as inspection and appraisal
- Private Mortgage Insurance (PMI) premiums, if applicable
- Home insurance premiums
- Title insurance premiums
- Lender fees such as origination, underwriting and discount points
- All costs associated with a mandatory homeowners association
- Warranty fees
- Repayment amounts for any existing loan or lien
- Lawyer’s fees for the preparation of documents
- Commissions for real estate agents
- And the list continues….
The settlement statement, HUD, or closing disclosure is where the final accounting is done. It tells buyers exactly how much money they need to bring to closing, and for the seller, it will show their expected net profit once the deal is closed and funded.
Typically, the title company will provide a closing disclosure or settlement statement to buyers, sellers and their Realtors® twenty-four to forty-eight hours prior to closing. When you receive this extremely important document, you should read it carefully. It must correspond to the agreements made in the original sales contract, as well as any subsequent changes that may have occurred. Buyers, if you are borrowing money, make sure the interest rate and terms of the loan match what your lender told you. Sellers, make sure payments are correct, etc. Buyers and sellers, if you have any questions, ASK THEM. Call your lender, call your REALTOR or call the title company, but PLEASE DO NOT WAIT to be seated at the closing table. Some changes or corrections must be resubmitted to the lender for approval and waiting until the last minute could delay your closing for days. When the moving truck is in the driveway waiting to be unloaded, the last thing anyone wants is an unexpected delay.
As always, if you have any further questions on this or any other real estate related topic, please do not hesitate to contact us at 817-219-0456 or visit us online at www.WeSellGranbury.com. We would like to hear from you.
[email protected] | 817-219-0456